Here's what the German fintech landscape currently looks like

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As the European fintech industry matures, Germany is increasingly establishing its credentials in the space — national financial regulator BaFin has clearly laid out regulatory requirements for fintechs wanting to operate in the country, while VC-backed funding for German fintechs bucked the downward global trend in 2016 to reach $421 million, up 118% from $193 million in 2015.

Germany is also starting to catch up with the UK, which has historically been the leading European fintech hub when it comes to funding — in both Q2 and Q3 of last year, German fintechs attracted more VC funding than firms in the UK. We expect Germany will continue to build on this strong base to establish itself as a European fintech leader over the next few years.

There are a number of cities in Germany seeing significant progress in building up fintech communities. This suggests a model more closely aligned with the US, which has at least two fintech hubs in San Francisco and New York, and is in contrast to the UK, where the fintech industry has been concentrated in one city, London.

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The UK's decision to exit the EU has left the future of its fintech industry unclear, creating an opportunity for Germany to step into the potential breach. UK-based firms will likely lose the benefits of passporting — by which any firm authorized in one EU country can operate in any other without additional licensing — while firms based in Germany will continue to profit from that right, and thereby access to a consumer market of over 500 million.

They will also maintain visa-free access to talent from across the wider European Economic Area (EEA), which their British peers will lose, drastically reducing the available talent pool in the UK. These factors could make Germany more attractive than the UK to firms looking to expand to Europe, and may also convince fintechs that are currently UK-based to relocate.